$462 Billion Heist

The study, titled The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, authored by Dev Kar, an economist with the US-based Global Financial Integrity, a non-profit research body, says the capital flight between 1948 to 2008 accounts for nearly 40 percent of India’s gross domestic product. Half of the illegal outflows have occurred since 1991 and a third between 2000 and 2008.

These “illicit financial flows,” says GFI, “were generally the product of corruption, bribery and kickbacks, criminal activities and efforts to shelter wealth from a country’s tax authorities.”

It adds: “Had India managed to avoid this staggering loss of capital, the country could have paid off its outstanding external debt of $230.6 billion (as of end-2008) and have another half left over for poverty alleviation and economic development.”

Kar said, “It shows that reforms seem to have accelerated the transfer of black money abroad.”

The report says: “The total value of (such) illicit assets held abroad represents about 72 per cent of the size of India’s underground economy which has been estimated at 50 per cent of India’s GDP (or about $640 billion at end-2008) by several researchers. This implies that only about 28 per cent of illicit assets of India’s underground economy are held domestically.”